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Why a C-Corporation?

ROBS requires a C-Corp because the 401(k) plan must purchase qualifying employer securities - stock - which only C-Corporations issue in the way required under IRC 401(a). LLCs, S-Corps, and sole proprietorships cannot be used.
If you haven’t formed your entity yet, that’s fine. Nexus coordinates entity formation as part of the ROBS setup process. Don’t form your entity before starting the ROBS process - the plan and entity need to be set up in the correct sequence.

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Choosing a Jurisdiction

The right jurisdiction depends on where the business will operate, whether outside investors are likely, and how much state-level complexity you want to carry.
Best for: Most companies that may eventually raise outside capital or want the most familiar corporate-law framework.Advantages:
  • Most developed corporate law in the U.S. (Court of Chancery)
  • Standard for venture-backed companies
  • Flexible corporate governance statutes
  • Well-understood by investors, attorneys, and regulators
Considerations:
  • Annual franchise tax ($400 minimum for small companies)
  • If you operate in another state, you’ll also register as a foreign corporation there

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Formation Sequence

The order of operations matters in ROBS. Here’s the correct sequence:
1

Form the C-Corporation

File articles of incorporation with the state. Obtain your Certificate of Incorporation.
2

Obtain an EIN

Apply for an Employer Identification Number from the IRS. Required for the 401(k) plan and business operations.
3

Adopt Corporate Governance

Bylaws, initial board action, officer appointments, and share authorization. Nexus generates these documents.
4

Establish the 401(k) Plan

The C-Corp adopts the 401(k) plan. Plan documents (Adoption Agreement, Trust Agreement) are generated.
5

Roll Over Retirement Funds

Your existing retirement funds transfer to the new 401(k) plan.
6

Purchase Stock

The 401(k) plan purchases C-Corp stock. The corporation now has working capital.

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Stock Structure

For a new ROBS company, stock is typically issued with a low par value. The share purchase price is set based on your total rollover amount and the number of shares authorized. Example: If you’re rolling over $150,000 and the company authorizes 150,000 shares, the 401(k) plan purchases 150,000 shares at $1.00/share. The C-Corp receives $150,000 in working capital. The par value ($0.0001) is a legal minimum - the actual purchase price per share is determined by the capitalization structure. Nexus performs an initial fair-market valuation for the qualifying employer securities purchased by the plan trust. Appraisals become more relevant in Year 2+ for ongoing plan valuations and for acquisitions or operating businesses with assets, revenue, or other valuation inputs.

Start the Process

Check your ROBS eligibility to get started.